Pensions likely can't be touched Changing benefits to lower property taxes won't wash, panel says. Thursday, August 24, 2006 • By TERRENCE DOPP • The Express-Times TRENTON | Any attempt to change pension benefits for current state workers or raise the retirement age to 60 would likely be unconstitutional, according to a legal decision released Wednesday by the nonpartisan Office of Legislative Services. "Those benefits, we believe, are protected for employees with five years or more of service and retired employees," said Peter Kelly of the Office of Legislative Services. Kelly told the Joint Committee on Pension Reforms the benefits are an "unforfeitable right" that cannot be altered. The six-member panel is one of four looking at ways to reduce New Jersey's high property taxes. The retirement benefits "cannot be reduced or we would be in default of the contract," Kelly added. In the decision, the Office of Legislative Services says pensions can be changed for employees with three years or less of work experience. As the Legislature looks to find ways to reduce real estate tax bills, which average $5,800, the costly and complex system of public pensions has come under scrutiny. One possible cost-cutting measure to emerge is the two-tier benefit system, which would maintain pension benefits and the 55 retirement age for current workers but enroll new hires in a 401(k)-style contribution plan. Gov. Jon Corzine has said he may attempt to discuss such a deal when the next public employee contract is renegotiated next year. In a speech last month kicking off a session of committees studying property tax reforms, Corzine called the system a viable option for saving the state money. "It stops the bleeding," said Sen. Stephen Sweeney, D-Gloucester, of a two-tiered system. "We have 80,000 people working for us right now. As people leave, others come on board with a new package." Sweeney and Democratic Assemblyman Paul Moriarty are sponsoring a 15-point package designed to reduce state employee benefits by 15 percent. It calls for a two-tiered system forcing new workers to pay increased payments into the existing public pension system, raising the minimum retirement age and increasing health care payments. Union leader Carla Katz, head of the largest public union in New Jersey, said a two-tiered structure would hurt the state workforce. "It would end up being divisive and disruptive to the workforce. It would make it hard to recruit and retain qualified employees," she told reporters following Kelly's testimony. "We are not the cause of the property tax problem," she said. "And they are not going to be able to solve it on the backs of public employees." State and other public sector workers are covered by a web of six separate pension systems: • the Public Employee Retirement System covering state, county and local government employees; • the Alternative Benefits Program covering higher education workers; • the State Police Retirement System; • the Teachers pension and Annuity Fund; • the Police and Fire Retirement System; and • the Judicial Retirement System. On top of that, the state is contractually obligated to tack on $178 million in other increases such as the cost of covering public school teachers' Social Security payments. Terrence Dopp is Trenton correspondent for The Express-Times. He can be reached at 609-292-5154. © 2006 The Express-Times. Used with permission.